Christmas 2016 may now be past, but holiday credit card bills can haunt your present well into Christmas future.
Maybe you spent more than you planned on a last-minute gift or sprang for dinner for unexpected holiday guests. Decembers tend to bust the best budgets.
Let’s say you charged $500 in gifts and food over the holidays on a credit card with an 18 percent interest rate. If you pay only the minimum balance of $20 due each month, it will take you 42 months — or more than three additional Christmases — to be rid of this year’s holiday debt.
In that time, you will pay $674 including interest, making this year’s spree cost about one-third more than you initially spent. You can plug in your own numbers on an online payment calculator, like this one.
Try these seven post-holiday hacks to replenish savings and pay down debt.
1. Pay yourself first
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You’ve heard this a lot, but it’s not that hard to make your savings grow automatically. Set up automatic savings through payroll deduction at work. See if your employer allows you to directly deposit your paycheck to multiple accounts.
2. Track your money
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Use the tool provided by Money Talks News partner PowerWallet or a similar aggregating app that allows you to view all of your accounts in one place — checking, savings, retirement accounts and more. They let you set up budgets and track your spending by category.
3. Shop your pantry
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Got holiday leftovers? Get creative with what you’ve got on hand. Only shop for what you need fresh, like milk and produce. Use up the flour, canned goods other items first. Avoid last-minute fast-food outings, take lunch to work and do without a cappuccino.
4. Tackle credit card balances
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Traditionally, financial advisers tell consumers to pay off their highest-interest loans first as their cost adds up the fastest. But this study by Blakeley McShane at the Kellogg School of Management at Northwestern University suggests that consumers who close more accounts — rather than reducing the size of a single account — are more likely to clear their remaining debt.
To help you figure out which approach is best for you, read “Which Debt to Pay First — Lowest Balance or Highest APR?”
5. Transfer a balance
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Shifting your balance to a 0.0 percent balance-transfer credit card might buy you some breathing room. Just remember that it’s likely not free. Transfers usually involve a fee. Still, a break on interest rates may ease the pain. We can help you find the credit card offer that best fits your life.
6. Return gifts
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You won’t be alone if you return a dud gift. If you have the receipt (or a gift receipt), bring it back to the store for cash or store credit. If possible, make sure the item is wrapped in its original packaging and keep tags on clothing and shoes. Click here to see our “12 Tips for Returning Gifts as Gracefully as Possible.”
You also can post what you don’t want on eBay, Craigslist, apps such as OfferUp and neighborhood websites.
7. Turn gift cards into cash
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Online sites such as Cardpool and Raise will get you cash for your gift cards, with returns of up to around 92 percent of each card’s value. If you don’t want to wait, Coinstar — known for kiosks where you trade spare change for paper cash or gift cards — has set up hundreds of kiosks in grocery stores where you can exchange gift cards from more than 150 stores and restaurants for cash. Cash amounts vary by card, but the kiosks spit out vouchers that you take to the customer service counter for instant redemption.
How do you handle holiday debt? Share with us in comments or on our Facebook page.
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